Unleash the hidden financial challenges of the candidate

Emmanuel Macron finally removed the tacit word from the pathetic presidential campaign on March 2 by announcing the economic and socially difficult times of the coming years. The country’s economic outlook was prepared by the auditor’s court long before the war arrived in Europe and confused all forecasts. In a June 2021 report, it already announced a difficult budget period. Wars with economic and budgetary consequences do not solve the problem. Therefore, whatever the outcome of the election, it is better to know the court’s forecasts and recommendations and ask the candidates about their future budget …

Permanent impact of health crisis

Traditionally, the Board of Audit publishes its analysis after the election so as not to overwhelm the candidate. This year, the courts will take the lead in both school and state budgets and will not hesitate to ask for post-election perspectives.

Yes, About school, The court has already taken up the old proposal and, on a budget, the proposal is very up-to-date. And they are at the heart of the court’s mission. If they do not bind future governments, set up a binding framework anyway. In any case, the court will develop budget, fiscal and economic policies for the next five years.

For courts, the crisis will have a lasting impact on the economy. It does not anticipate debt reduction until after 2027. The reduction in activity due to confinement led to a 7.9% decrease in GDP in 2020. The public deficit reached 9.2% of GDP in the same year and remains very high at 9.4 in 2021. %. Public debt increased from 100% to 117% of GDP between 2019 and 2021.

“The crisis should have a lasting impact on the economy. By keeping people away from employment (or by delaying the entry of younger generations into the labor market), it leads to increased unemployment and reduced participation in the labor market. In addition, the crisis can weigh on innovation capacity with a sharp decline in business investment, so capacity and productivity are higher than expected in early 2020. It will be low in the crisis, “the court wrote. For her, France lost 2% of its production capacity during the health crisis. As a result, she says, “Even with a voluntary hypothesis, economic growth, which is an essential condition for fiscal recovery, cannot permanently reduce public debt compared to GDP.” For the court, the continued increase in debt will raise the issue of confidence in repayment capacity and ultimately the issue of sovereignty.

Court budget forecast

This is where the court proposes what the actual budget program for the next government is. Even if debt reduction is not possible for the courts until 2027, future governments will be forced to reduce their spending. It will pass the programming method voted for a five-year term in the fall of 2022.

Where do you start reducing spending? Courts show areas where France is above other countries in the euro area. This is the case for education, but courts have shown that this gap has already narrowed considerably since 2001. Areas where the gap is most important are pensions, economy, health and housing.

Social impact

The court recommends pension reform to reduce costs. It is necessary to “continue to adapt to the pension system in order to curb the progress of expenditures.” Courts are also seeking more “efficiency” in medical costs. The means to achieve this is the Social Security Loan Act, which combines social security, pensions (including supplementary schemes) and unemployment insurance. Therefore, there is also a “coordination” of unemployment compensation and employment assistance. The court also calls for “ensuring sustainability” of social minimums and housing aid.

Finally, the courts are calling for a reform of the government, which it presents as “modernization.” This requires the abandonment of “missions that the public sphere no longer intends to exercise” and the “responsibility” of the parties involved in developing the contract.

President’s priority question

Since this report, new elements have arrived with the war in Europe. E-Macron has announced a new increase in military spending. A recent parliamentary report released before the invasion of Ukraine has already called for this spending to increase from 2% to 2.5% of GDP. The current situation probably suggests a higher increase in GDP by one point. That’s 20 billion you have to find somewhere.

Obviously, candidates are not obliged to follow the auditor court scenario, even if it attracts state budget experts. And the government hasn’t said anything concrete about the next military programming law yet.

Nevertheless, some conclusions can be drawn. The first is that the auditor court scenario leaves something behind for future government action. Second, the presidential speech on March 2 will give you the opportunity to ask questions about the candidate’s budget outlook. Let’s say that: Until then, the prospect of fragmentation of the education system due to generalized contracts between institutions and teachers was supported only ideologically on the right side, and perhaps even by candidate Macron. Now you can see the budget base for that realization materialize.

Fran├žois Jarrow

Court report